The average price of a home in the UK is now £204,674

The average price of a home in the UK has increased to £204,674, according to Halifax.

The average home price within the three months to August was £204,674 – 9 percent higher compared to the same period last year and 3 percent higher than in the previous three months.

The reasons why house prices have surged is primarily because of a shortage of second-hand properties, low mortgage rates, as well the economic recovery improving financial conditions across the country.

Martin Ellis, Halifax economist, said:

“The underlying pace of house price growth is strong.

“The shortage of second-hand properties for sale on the market is resulting in upward pressure on house prices. At the same time, economic recovery, real earnings growth and very low mortgage rates are supporting housing demand.

“Strengthening demand, and highly constrained supply, are likely to mean that house price growth continues to be robust in the short-term,”

House price inflation expected to hit 6% this year

The Royal Institution of Chartered Surveyors (Rics) now expects house price inflation in the UK to hit 6% this year, up from the 3% rise it expected at the start of the year.

“Given current market conditions, the latest data unsurprisingly shows house prices continuing to rise, and at an accelerating pace,” said Simon Rubinsohn, Rics chief economist.

“And there is good reason for this trend to be sustained into next year, however uncomfortable that may be for those looking to enter the market.”

Despite the rise in property prices, it is still cheaper to buy than to rent

It is still cheaper to buy a house than to rent one though (on average). The average monthly cost of purchasing a three bedroom house for a first-time buyer is £56 lower than the typical monthly rent.